Why Sharing Information on Innovation is a Good Thing

2012 starts off with the blitzkrieg of consumer technology that is the Consumer Electronics Show in Las Vegas. Top of the bill this year is a slew of smart devices supporting 4G LTE, destined to be the wide area cellular network technology to replace all others. With Verizon and AT&T LTE already deployed in 190 markets and 26 markets respectively, Sprint is hurrying to upgrade its Clearwire-based WiMAX infrastructure to support LTE in 10 markets by mid-2012. I have been using a Samsung Galaxy Nexus LTE smartphone on Verizon and have experienced download speeds of 28Mbps, so there's no doubt it's a sea change for network capability. Indeed Verizon's faster-than-planned rollout of LTE is the quickest mass deployment of any cellular technology by any carrier, ever. The speed at which this technological marvel is proliferating is driven by the shared knowledge between carriers and device manufacturers that this is the Next Big Thing; consumers demand faster connectivity and network operators need greater capacity networks to cope. Of course the carriers hope to monetize this enhanced capability to offer new services based around video, audio and digital photography. In the end, everybody should win; happy operator, happy customer. So you can imagine my surprise when I read that Virginia Railway Express (VRE) is dropping plans for Wi-Fi on its trains, according to CEO Dale Zehner. "During our last survey most riders said they wouldn't use it if it wasn't free," said Zehner during an online chat via the VRE website. "Also, I am not convinced that we can provide uninterrupted service at this time." Having re-read this statement a couple of times, I had an OMG moment. Or possibly a WTF moment. Or both. What you have to understand is that VRE and Wi-Fi have been a public, long-running will-they/won't-they saga turning the whole thing into a PR nightmare. VRE announced in January 2011 they'd have a limited deployment of Wi-Fi on their trains by the spring of that year. By February that had changed; they'd do the whole fleet instead at a capital cost of $1 million and ongoing costs of around $100,000 per year, as "[passenger] demand is going to be significant" according to VRE spokesman Mark Roeber. By June VRE had pushed back the timeline but promised an RFP would be issued during the summer of 2011, and Wi-Fi live by the end of the year or early 2012. While VRE dithered during 2011 many other transit operators took a more decisive multi-phase approach: develop a wireless connectivity strategy that encompasses both passenger Wi-Fi and operational applications; understand the technical requirements and scale of the undertaking; create a business model that delivers the necessary funding; issue a well-conceived RFP that attracts best-in-class vendors; award and build. Passenger Wi-Fi success stories of 2011 include Amtrak on the East Coast and in California, Santa Clara VTA light rail and buses, FirstGroup's Greyhound and BoltBus, and Stagecoach's Megabus. Additionally, several agencies have issued RFPs for passenger Wi-Fi, including LA Metro for the Gold Line light rail service. What makes the VRE decision frustrating are the three core reasons Zehner gave for dialing back the Wi-Fi plan: revenue generation, technical capability and capital cost. These are of course fundamental to the success of their initiative, but all three have been considered in great detail by other agencies that have successfully moved forward with their wireless plans. Let's look at each of Zehner's concerns in turn: Revenue Generation "Most riders said they wouldn't use it if it wasn't free." Indeed they won't; dozens of transit agencies have already come to the same conclusion. Passenger Wi-Fi is an amenity to improve the quality of the transit service, make the journey more productive, retain existing ridership, and encourage new customers to leave their cars at home and take the train. This revelation is not news to Zehner – he told the VRE Operations Board on February 18, 2011 that "No commuter railroad system charges its customers for Wi-Fi service," and that "There is an expectation from passengers that it would be free." While free Wi-Fi won't generate revenue directly through a pay-per-use scheme, it would make VRE a better class of service while possibly improving farebox revenues through induced ticket sales (as a result of free Wi-Fi being available). Technical Capability "I am not convinced that we can provide uninterrupted service." This is a reasonable concern, but then no transit agency can be assured of uninterrupted service for passenger Wi-Fi where train or bus connectivity relies on commercial cellular networks. This has not stopped agencies from moving ahead with deployments; Amtrak mitigates carrier black-spots by using four or more carriers and aggregating the connections to (a) create a bigger 'pipe' to the train, and (b) to allow seamless switching when one carrier's coverage may drop out ­– the others pick up the load. This is common practice on almost all inter-city wireless systems. Even Santa Clara VTA uses two carriers (Clearwire and AT&T) on its new hybrid Express buses, launched this week, to provide better than 98 percent connection uptime throughout the urban South Bay area of San Jose in California. VRE need not have been concerned about this issue; experience has shown that passengers accept the likelihood of occasional interruptions in Wi-Fi service. Free Wi-Fi is provided on a best-effort basis, and a well-designed system from a vendor who knows what they're doing will minimize such outages through appropriate use of multiple concurrent networks. Capital Budget "Funding has become an issue." Now we're probably getting to the real reason behind VRE's plans to drop Wi-Fi, and there's no better reason than lack of money; every agency understands this often-insurmountable issue. But one can't help thinking that VRE probably never did a full analysis of the impact free Wi-Fi might have on ticket sales. Furthermore Amtrak's deep-dive business modeling of wireless connectivity to its trains fully outlined the benefits of cellular for connecting passenger information systems (PIS), point of sales (POS) systems in the café car, and future applications in remote systems monitoring and control. So while passenger Wi-Fi was a key driver, the cost benefits were far reaching and long term. More importantly, Amtrak only need to see around a 2 percent uptick in ticket sales as a result of offering free Wi-Fi (i.e. induced sales) to cover the cost of the deployment. While this model may not work for all agencies (especially those whose vehicles are already crowded), there are other models to consider; VTA has identified net new revenue derived from selling advertising within the Wi-Fi splash pages. This covers its Wi-Fi system OPEX and contributes toward writing down the capital cost, too. For VRE the use of cellular backhaul for operational applications could lead to meaningful cost savings and, in the case of security such as inbound access to CCTV systems, result in financial assistance via federal grants. So where did VRE go wrong? Fundamentally its reasons for not proceeding are its own; I do not have all the facts. But the mistake made by VRE's CEO was to publically and consistently set expectations among the ridership for a service that ultimately was not delivered, while providing reasons that do not appear to be very well researched; an uncomfortable position to be sure. Ultimately I hope VRE will find a way to restart its Wi-Fi plans to meet the very real passenger demand. They can accomplish this by reaching out to other agencies that have embarked on successful wireless programs, leveraging the time and effort invested by those organizations. The sharing of experience is critical; innovators leading the way can help those that wish to follow their example. Amtrak and VTA are just two North American case studies, but there are many other agencies around the world eager to share what they've learned, and who would welcome the call. Only by sharing information on innovation can this industry hope to operate at its best efficiency while making travel on transit a welcome experience. Jim Baker is Managing Partner at Xenventure, a technology strategy firm with offices in London and San Francisco. An award-winning wireless industry veteran, Baker has been involved in many deployments of wireless technologies on passenger transport worldwide and is a recognized industry expert on the convergence of commercial and private networks for in-vehicle applications. He is chair of the Technology Committee at the Joint Council on Transit Wireless Communications that is developing a strategic plan for implementation of wireless technologies in mass transit. Contact Baker via LinkedIn or follow him on Twitter.